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High-Tech Start-Ups Put Down Roots In New Soil
Posted by
samzenpus
on Wed May 27, 2009 06:41 PM
from the welcome-to-nowhere dept.
from the welcome-to-nowhere dept.
ThousandStars writes "The Wall Street Journal says that 'High-tech start-ups are increasingly setting up shop in places previously not known for attracting high-tech firms. A number of cities, such as Kalamazoo, Mich., and Toledo, Ohio, are offering grant money and tax breaks to high-tech start-ups, just as the usual venture-capital hot spots, such as Silicon Valley and Boston, continue to see a pullback in venture lending.""
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better places to work (Score:5, Informative)
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Hiring is the problem. If you require highly specific skill sets you end up paying relocation... and who knows how well the relocation itself goes for the candidate.
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no problem at all for company, plenty of highly skilled people are desperate for work! companies say NO RELOCATION and if you want a job you move.
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You would be surprised at how many people live in those areas or want to because of family or whatever with the skill sets your looking for.
Ohio state and Michigan state both have top notch computer science courses as well as many niche courses in the same area. Plus you have people who moved to where the work was who would like to move back or closer to their real home.
Re:better places to work (Score:5, Informative)
The first big warning sign was when I saw that along with other fees and taxes, a CA LLC with absolutely no income is charged an $800 fee by the state every single year. This is four times or more of the initial fee in other states, and most other state only charge a legitimate filing fee for subsequent years -- along the lines of $50. The business taxes, plus the sales taxes, plus the income taxes, plus ridiculously high cost of living all add up to a massive inequity in ROI compared with other locations, and in return you get to live in a state on the verge of bankruptcy and your non-local business gets essentially no boost in sales due to its location. The single reason why I'm considering incorporating here is because if my business doesn't work out, this location has more jobs for my somewhat unique specialty compared with other locations. I can only see that lasting for so long, though.
Parent
Technology and internet access (Score:3, Informative)
Actually, it's quite interesting to see how - in terms of infrastructure - smaller cities compare to the big ones. Two years ago, I lived in a city (my hometown) of about 85,000 in BC, Canada. Internet access was generally quite fast, especially with cable providers, etc for residential. Around when I was leaving, the city in conjunction with various local businesses had been in the process of laying fiber in all areas.
After that I moved to Toronto, Ontario (population over 2,500,000). Internet and telecomm
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Could be Cray or SGI/Rackable too. I spent a fair amount of time in Chippewa Falls.
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Are those the people that make those little Spanish Language buttons for teevees?
I saw it happen in the early 90's (Score:5, Interesting)
Re:I saw it happen in the early 90's (Score:5, Interesting)
Parent
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Give the guy a break, he's probably a scotsman :)
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Plus... (Score:5, Insightful)
I wouldn't move from Pittsburgh to anywhere in California for any amount of money.
Parent
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When I quit Big Medical Co. in NYC back in March and had to hit the pavement, again, I noticed a lot of postings on Craigslist for Pittsburgh. I actually went back to Big Medical Co., but I'm still keeping an eye on Pittsburgh, since it's three hours closer to home. I'm a weekly commuter, so less time on the road is a plus.
What's PGH's claim to fame, lately? Yeah, sure, the Steelers won #6, but that can't have a whole lot to do with it.
Re:I saw it happen in the early 90's (Score:5, Insightful)
What we see on a state by state basis to attract jobs while at the same time we try to make the evil multinational corporations pay (Obama and taxes) we may start to see many start ups simply avoid the US.
Intel has been accused many times of avoiding paying taxes for the massive tax breaks they get to have a location in the Portland Oregon area, but most people don't realize they not only pay salaries taxed by the state, they also are taxed for their property. Nike also in the area has a much lower inventory tax because they don't have a fab full of multi million dollar manufacturing tools. To attract Intel, the city of Hillsboro had to adjust for this.
Failure to do this would let them have a larger piece of nothing, With no concessions for the value of the factory equipment Intel would have built elsewhere. The clean water and moderate electricity rates are what attracted them. High local tax areas could soon erase the advantages.
I am afraid that Obama's economic plan will drive the rest of large manufacturing overseas. The Union obligations are already having a severe toll on the auto industry without the help of taxes driving them out of business.
Tax the rich simply is to send them elsewhere in a global market where conditions are better.
Parent
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Show me a business that never loses a customer or employee to the competition, and I will show you a business that charges customers too little and pays employees too much. State giveaways to business are the same. I'd rather live in a state that grows slower but is financially bett
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I don't know what Obama policies you are referring to, unless it is closing offshore tax loopholes.
This thinking is prevalent. The value a multinational corporation makes or is worth is often up for debate. Often the tax rates are based on the company bottom line regardless of how much of the work is done where.
Examples are Nike where most labor is overseas and Intel where the US fabs produce the chips that are packaged overseas. The completed product is made in 2 countries. If both countries try to tax
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Yeah do like Ireland did! Whoring themselves out to multinationals has worked out *perfectly* for them.
They're doing really well now, now that all those multi-nationals that they sold themelves out out to have run back to their own countries where all those 'high' tax rates and corporate regulations offer a little bit of protection to them...
If all you have to offer is low tax rates to attract big businesses, then you've got nothing.
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Point well taken. Yeah do like Ireland did! Whoring themselves out to multinationals has worked out *perfectly* for them.
Multinational corporations are quick to use the competitive advantages to use as a bargaining chip. As in my earlier example, Intel.
http://www.intel.com/community/ireland/index.htm [intel.com] Intel does have a manufacturing plant there.
Along those lines, many people missed the Redmond giant is building a new headquarters.. If taxes get bad, they are not locked into the US tax the evil corporation
Oops wrong link. (Score:2)
Use this one.http://news.bbc.co.uk/2/hi/uk_news/scotland/edinburgh_and_east/7725221.stm Microsoft has a new headquarters in Edinburgh Ireland.
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they could commute in minutes and leave their doors unlocked without worry
And what town did you say this was? >.>
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Just about any town in rural America. PA, MN, OH, NY all have these towns where you can just walk into anyone's house without a problem. Criminality is low because a) a neighbor or somebody else might see you b) any scoping out before a job is impractical as a stranger in a neighborhood where everybody knows each other c) it's even more impractical to follow the habits of a 3 generation household in a house that stands by itself without anything around for miles d) there is a high chance of getting shot (th
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They decided who they wanted from the eated company...
I think you are looking for the word acquired. I recommend some remedial classes.
...they could own acres of land with three thousand square foot homes...
Ah yes, what America needs, more sprawl.
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Will I have to surrender my usage and grammar books at the border if I move to Minnesota ?
No, but you will have to learn how to talk and fish at the same time.
Its definitely the exception, and a rare one (Score:5, Insightful)
My wife & I left silicon valley about 5 years ago at the tail-end of the dot-com bust. I had a GREAT time there, aside from the worthless options and 80-hour work weeks. We thought it was time to start a family, and wanted a bigger, less-expensive house, no traffic, slower quality of life. We were willing to trade a premium salary for it.
WHAT A HUGE MISTAKE.
Turns out that when you're in a smaller town, you have NO OTHER employment options. What happens if you don't like your little tech company? uh, you're screwed. In Silicon Valley you always had a network three deep that could get you a fun, interesting job in a little bit. You had options. A backup plan. In smaller towns you're running without a safety net. If you leave the relocated tech-company, you've got the small-town mindset and businesses. I see plenty of craigslist ads that read, "must have 5 years networking experience, cisco preferred. Be able to build and administer our 50-person network. References required. $10/hr, contract only." I'm seriously NOT kidding.
I wish I could completely rewind my experience and still be in silicon valley. Higher rents, more traffic, silly housing prices and all.
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"must have 5 years networking experience, cisco preferred. Be able to build and administer our 50-person network. References required. $10/hr, contract only." I'm seriously NOT kidding.
Is that really unreasonable? Except for an occasional hands-on network lag testing (quake, UT, half-life), your scripts should be able to run the whole thing. Am I right?
Re:Its definitely the exception, and a rare one (Score:4, Interesting)
Sooner or later, they'll just start paying in scrip, redeemable at the company store, and it'll be the good old days all over again.
Parent
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To create a self-sustaining hi-tech center ... (Score:2)
What happens if you don't like your little tech company? uh, you're screwed. In Silicon Valley you always had a network three deep that could get you a fun, interesting job in a little bit. ... In smaller towns you're running without a safety net. If you leave the relocated tech-company, you've got the small-town mindset and businesses.
To create a hi-tech center you need to create the whole structure. You can't just attract a single hi-tech company for the cheap labor, for the reasons given above. You nee
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You probably want the US Metro Area Rankings [wikipedia.org] instead, actually. Unfortunately, a lot of economic activity occurs outside of cities. (tl;dr: sprawl.)
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Re: Erie. Aside from the Peach St. exit off of I-90, it's kind of "rugged." The Peach St. area, however, is going bonkers with all kinds of retail. I like Cleveland much better, even though it's two hours further away from me.
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Well said. It also helps if you don't have children or a spouse. Though a spouse can definitely help if she's also working and making good money.
Online Economy (Score:5, Insightful)
The economy is moving online. Soon, it won't matter anymore where you live and who you work with.
And I'm not talking about the scams such as "make $100K working from home". I mean real, legitimate, value-added work (like programming), that you do wherever you want, whenever you want, as long as you deliver a good product.
Re:Online Economy (Score:5, Insightful)
Uh, that's been possible for, like, 10 years now. When's that going to happen?
Parent
Re:Online Economy (Score:4, Insightful)
It already did. In India.
Parent
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Can you outsource doctors, lawyers, teachers, cops, firemen, etc. even in the absence of "artificial barriers"? Medical tourism is possible, and some legal research could be done from overseas, but it would be difficult for Bangalore firemen to respond to a blaze in Peoria. Some things just can't be outsourced.
What about marriages? (Score:5, Insightful)
Problem is, and all jokes about single engineers aside, that means the spouse has to find something viable in that location as well. Some professions are pretty portable, others aren't. But it's not just about where you can lure a single person.
Plus, if you lose your job, suddenly you're in Toledo where there's not that many other companies. At least in the Bay Area, you know you have multiple options to switch to should you want to. Without having to sell your house which no one wants or needs to buy. (Admittedly this is a chicken-and-egg problem; if enough companies move to Toledo or wherever, this goes away.)
I'm with Paul Graham on this: it won't work. (Score:5, Informative)
Check out How to Be Silicon valley (http://www.paulgraham.com/siliconvalley.html).
Based on the description of the right environment, we're not talking Kalamazoo or Toledo by
a long shot. Besides, didn't people try this crap en-mass before the dot.com bust?
Re:I'm with Paul Graham on this: it won't work. (Score:5, Interesting)
I've heard so many of these stories about how XXX will be the new place for tech. I don't see any reason to start believing it now. If you want to relocate away from Silicon Valley or one of the other tech areas of the US, you might as well relocate to India or east Asia or somewhere that is even cheaper than Kalamazoo.
Parent
Re: (Score:2, Funny)
I've heard so many of these stories about how XXX will be the new place for tech.
Sweet! I've been waiting for some high tech porn.
Look At Pittsburgh, Though (Score:3, Interesting)
It's only become one of the top places in medicine on the planet. That's pretty good for an old steel town.
It is possible to build out the educational and corporate infrastructure in a "cheaper" place.
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Not to mention robotics, file systems and a few other areas - seems to be a nice intersection of hardware + software expertise in the area.
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No, the University of Michigan is 2-3 hours away in Ann Arbor. And people who like Ann Arbor will stay in/near Ann Arbor. People who don't like Ann Arbor sure as hell won't like Kalamazoo. The cost of living is not that much more in AA (unless you want to live on main street, and even then we're not talking Bay-area housing prices) and it's a much nicer city.
FYI, Kalamazoo has Western Michigan University.
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Does Kzoo have a better 12-step program? :-)
Will Silicon Valley survive? (Score:3, Interesting)
Silicon Valley is definitely in decline. The current recession is hurting, but that's not the real problem. Part of the problem is that manufacturing moved out. Venture capital isn't doing well. Venture funds as a group are losing money, and have been for several years now. There was one tech IPO in 2008 before the crash.
Worse, there's an idea shortage. Here's a list of companies looking for venture funding this month. [launchsiliconvalley.org] "Short dial codes" "Timeshare lead generation". "People powered search" (yes, that again). Yawn. There's nothing in the pipe that looks like a big win even if it succeeds.
More on Relocation (Score:2)
I'd go to Detroit. Seriously. (Score:4, Interesting)
People seem to forget that Shockley went to death valley because there was absolutely nothing there and you could get all the basics dirt cheap. The nutcases that started the silicon revolution did that in barns and garages and of those in the cheapest they could find. The shockley five went to start Intel in the neighbourhood and thus Silicon Valley was born.
If I where building a startup in the US today, I'd seriously consider Detroit. You can buy houses for 500$ right now in Detroit and infrastructure is just good enough to live. You could spent years there on the most minimal VC and since Detroit is so super-boring now the team actually would have a personal interest in concentrating on the thing their building.
Revolutions very often start in extremely unspectacular places, where the artists and crazies move in because they have other things to worry about than finding the best way to rake in cash. It's only a few decades later that these places become the hippest areas on the planet. Notting Hill in London, Schanzenviertel and Hafenstraße in Hamburg, etc. etc. - all the same story.
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When I moved back to Michigan two years ago I seriously considered moving to Kalamazoo for the reason you state. However, it's not a strong enough reason to go there. There has to be work. And my industry is only seeing cuts, cuts, and more cuts. In fact, Pfizer canceled their shuttle about six months after I moved here. Duncan aviation has axed much of their productivity in Battle Creek, charter operators are struggling. The college (last I heard anyway) had laid off some flight instructors. It would be ni